France votes again, results season

Daniel Garrahan highlights some of the big stories the FT is watching in the week ahead, including the second round of the French presidential elections; Pfizer, BP and Shell reporting first-quarter earnings; and the latest German jobs data.

Produced by Dan Garrahan. Filmed by Rod Fitzgerald. Edited by Filip Fortuna.

Transcript

Hello and welcome to The Week Ahead from the Financial Times in London. Here are some of the big stories we'll be watching this week. France votes again Marine Le Pen and Emmanuel Macron face off in the second round of the French presidential election.

Results season in full swing. Pfizer, BP, and Shell all report first quarter earnings. And will Berlin continue to power the eurozone? We'll get a good indicator later this week when the latest jobs data is released out of Germany.

First to France, where the second round of voting in the presidential elections takes place on Sunday. And it's a head-to-head battle between the leader of the far right National Front Marine Le Pen and the independent centrist Emmanuel Macron. The polls show the pro-european and pro-free trade Macron already has a 20-point lead on a protectionist anti-immigration Le Pen.

So markets are breathing a sigh of relief. But the pollsters haven't always got it right recently, most notably with the election of Donald Trump in the US and with Britain's vote to leave the European Union. So should investors be more concerned about a Le Pen victory? Our Paris correspondent Michael started has more.

Most pollsters say that a Le Pen victory looks near impossible. But the campaign of Mr. Macron has already got off to a wobbly start as he celebrated his first round win in an exuberant fashion. A soft turnout or an embarrassing gaffe in the final week could turn the polls against him. And even if he's unlikely to lose at this point, if he wins by only a narrow margin, it could very well undermine his authority going into the legislative elections next month.

Next to the US, where one of the country's largest pharmaceutical companies, Pfizer, will issue first quarter earnings this week. Wall Street analysts expect it to report adjusted earnings of $0.67 per share on revenues of $13 billion. And investors will be paying close attention to the company's cancer franchise, as our senior US business correspondent David Crow reports.

Pfizer is commonly known as the drug maker that sells medicines for your family doctor, but it's been trying to build a cancer franchise where it would sell directly to oncologists. And key that effort is a drug called Ibrance. It's been doing very well in the US, but now people are asking how well it's going to do in Europe and other overseas countries.

Staying with earnings season, oil majors BP and Shell will also announced first quarter results this week. And both sets of numbers are expected to demonstrate the benefits of higher oil prices. The international benchmark Brent crude is trading almost 80% higher than the 12 year lows recorded early last year. And both BP and Shell are set to see earnings sold by a similar amount. But the similarities end there. Investors will be looking at two companies which are playing very different strategies as our energy editor Andrew Ward explains.

Shell made the big acquisition of BG Group a couple of years ago, which it's been integrating and also trying to reduce the large amount of debt that it took to make that acquisition. It's been selling a lot of assets to do that, so the balance sheet is now improving. Debts are falling, and it can now cover its dividend with free cash flow.

BP, on the other hand, is on pressure-- under pressure to replenish its reserves, rebuild its portfolio after the retreat by BP since the Deepwater Horizon disaster in 2010. So it's been making acquisitions, and that's putting its balance sheet under a bit of pressure. So the balance sheets are going in different directions. But in general, investors are pretty happy that both these companies are now moving in the right direction.

And finally, to Germany. Through the years of financial crisis and hardship, the German economy has been the eurozone's motor, and its strong performance has helped keep the single currency in gear. In part thanks to the strength of the country's labour market. And this week, we'll be looking to see if that's set to continue and what it could mean for Chancellor Angela Merkel, when fresh German jobs data is released. Here's our Frankfurt Bureau Chief Claire Jones.

Unemployment is now at its lowest level since the reunifcation East and West Germany. It's expected to stay around those record low levels this month. We're going to get the data later this week, and it's expected to show the rate remaining around 6%, which is very, very welcome news for Angela Merkel who's seeking a fourth term as chancellor in elections in September. The stronger the economy, the stronger the labour market, the better her chances.

And that's what the week ahead looks like from the Financial Times in London. See you again next time.